TGCI 226: Ex Marine Corps created teams to jump start his syndication journey

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Episode 226: Ex Marine Corps created teams to jump start his syndication journey

Copy of EP #18 - 2 Guests

Summary

For today’s episode, Pancham interviews Wesley Yates, a commercial real estate syndicator who specializes in multifamily, hospitality, self-storage, mobile home, and RV park assets.

He started his real estate journey in 2019 and had a wide range of experience, from commercial real estate to the financial services industry.

Before his real estate career, Wesley served as an active-duty Marine for nine years and trained over 2,000 individuals for leadership and development roles and recognized by Congressman Ralph Hall for his outstanding character and service to his community.

Know more about Wesley and his goal to reach $1 billion worth of assets and provide opportunities for growth to others.

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2023-03-22 at 5.06.16 PM
Wesley Yates

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 0:36 – Pancham introduces Wesley Yates
  • 1:52 – How Wesley started in the Marine Corps before getting into real estate
  • 7:03 – Starting on his syndication journey
  • 11:01 – Wesley built teams to raise capital for his investments
  • 18:18 – Finding his better partner in self-storage investment
  • 22:45 – Why did he switch from multifamily to self-storage investing
  • 30:28 – Wesley’s first time investing outside of Wall Street
  • 32:11 – One of his investments didn’t go as expected
  • 36:48 – His advice for people starting their investing journey
  • 37:41 – How can you connect with Wesley

3 Key Points:

  1. Multifamily syndication is oversaturated.
  2. Self-storage investment is easier to manage because you don’t have a living tenant.
  3. One of the most underdeveloped aspects of every team is leadership.

Get in Touch:

Read Full Transcript

Welcome to The Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high-paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host Pancham Gupta.

Russell Gray

Hi. This is Russell Gray, co-host of the Real Estate Guys Radio Show. And you are listening to The Gold Collar Investor Podcast.

Pancham Gupta

Welcome to The Gold Collar Investor Podcast. This is your host Pancham. I really appreciate you for tuning in today. My guest is Wesley Yates. Wesley served as an active-duty marine for nine years. During his time in the service, he mentored and trained over 2,000 individuals for leadership and development roles. He was recognized in 2013 by Congressman Ralph Hall for his outstanding character and service to his community. Now Wesley is a commercial real estate syndicator who specializes in acquiring multifamily, hospitality, self-storage, mobile homes, and RV park assets.

(interview)

Pancham Gupta

Hey, Wesley. Welcome to the show.

Wesley Yates

Thank you.

Pancham Gupta

Are you ready to fire up my listeners break out of Wall Street investments?

Wesley Yates

Absolutely. I am a rebel of Wall Street, and I am ready to talk about my investment journey and how others can take advantage of several other investment opportunities outside of Wall Street.

Pancham Gupta

Let’s do this. I have so many questions about the background that you have over there. So many trophies. And that flag, what does it say? I don’t even know the cushion that you have. Maybe let’s start with your background, how you got started after you graduated, and then how you got into the business that you’re in today.

Wesley Yates

Absolutely. Nothing special about where I came from. I was just a regular kid from East Texas that right out of high school went to the Marine Corps. I did nine years. I did serve overseas. The flag behind me was a tradition we started while I was out there. Before we left, everyone we serve with actually went and signed the flag for us. Then we had the memories. It kind of means a lot to me, because one of the guys that was one of my Marines end up getting killed. So, I have a little bit of that there. I just carry that around with me. Finally, I had an office. I was like, all right. I’m out now. So, I could hang up all — my wife calls it all my tchotchkes and stuff. So, I’m like, all right. Cool. Well, some good old memories.

Pancham Gupta

What country is that?

Wesley Yates

It’s Iraq.

Pancham Gupta

Iraq. Okay.

Wesley Yates

Yeah, but I got out of the Marine Corps to be a full-time dad. I put myself through college. I started off doing engineering, applied Engineering, doing the whole six sigma route. I started off with electrical engineering. But then, I realized that was going to be too much in an office. I was like, no, I need to be able to talk to people and work with people. So, I went with the applied route. I ended up graduating somehow with a finance degree when it was all said and done.

I had a job with Amazon lined up. Then I met my wife today. She was the one that was in real estate. So, I was told very early on. Our first official night out, our date night, was her event that she was running. It was pretty much said in the car before I got out. “I am working. I do not have time to babysit you. If you get jealous or offended, you might as well go back to the car.” I think I fell in love right there. I was like, oh, yeah, power. Let’s go. I loved the event. I fell in love. I kept going to more events as a plus one. It was a matter of time before I got a phone call with someone going, “Hey, we’ve heard about you. We would like you to look at syndication with us.” I was like, “Syndi- what?” They were like, “Yeah, show up to this event tomorrow.” I hopped to my truck. I drove three hours. I showed up to my first real estate event and just hit the ground running. It’s been a crazy journey. That was July of 2019 when I officially took my first active step into investing in real estate.

Pancham Gupta

Really? Wow. July 2019. So, after you got graduated and you went the applied route, you were in electrical engineering. By the way, my wife is an electrical engineer. After that, you started working full-time. Did you officially work full time as a W2 employee somewhere outside of Marine Corps?

Wesley Yates

You could say luckily unlucky, if you want. I finally found an advocate that fought for my disabilities and all of that. Finally, we got the VA to approve me for 100%, and I did have that job. That was the deciding factor if I had the job with Amazon. If I didn’t get my appeal awarded, then I was just going to take the job and do real estate part time. We were lucky enough to basically sacrifice the — I had the 100%, and we just budgeted our world around what I was making there between what I was making and my wife were making. Then everything within real estate, we got put back into the next chapter of real estate. Really just scaling forward, paying it forward little by little. So, I’m equity rich but cash poor, if they say. But I’m still young enough to keep scaling. I was like, look, I’m fine. The family is fed. The wife is fed. The roof is over the head. We’re doing fine. Let’s just keep scaling and just basically have a happier for your retirement, if I ever do decide to officially retire.

Pancham Gupta

Got it. So, your wife — at the time, your girlfriend — she was in real estate. Was she a realtor? What was she doing?

Wesley Yates

She was actually just working for — she was doing some wholesaling here and then working for an academy, actually. Just working with that. And then hosting events here and there to help with that stuff.

Pancham Gupta

Got it. Basically, before you got into syndication, did you have any real estate experience?

Wesley Yates

No, my mom was an HR director. My dad’s a master electrician. I had no experience. I mean, I very much came from that poor mindset family. So, it was all on me to put myself out there. I was broke. I was making like $24,000 a year. It was rough. I didn’t have anything going for me other than my ambition. I just kept showing up to the networking events that were free or the ones that I could afford, finding any book that I could get my hands on. I was doing a lot of driving because I lived out in the middle of nowhere. So, the closest event for me was about two hours away. I was like, well, I’ll put on audiobooks the entire journey. I probably read more books that year than I have my entire life combined. But it helped.

Pancham Gupta

Wow. That’s awesome. So, let’s talk about your syndication career. You go to this event. I’m assuming it was syndication, teaching syndication. Something like that to that effect. You got inspired, and you wanted to do syndication. What happened next?

Wesley Yates

Well, the first thing that I was on failed miserably. Then I got picked up by another team. I learned everything I could there. It was really starting out about learning as much as we could about multifamily. Then I moved over to hospitality. Someone picked me up and said, “Hey, I’d like to bring you onto my hospitality team.” In three months, I had three projects under contract. Then COVID hit, and every bit of hospitality tanked. We closed on our house. We moved. We sold everything we had out in East Texas. We moved to DFW. Closed on our house, March 13th of 2020. March 15th of 2020 was when COVID eventually was like a thing. It is here. We all went into quarantine. My wife is freaking out. We left a 20-acre farm to be in the middle of all of this metroplex. What were you thinking? All of the deals that we had under contract all went basically tanked. Because it was hospitality, I think that got hit really hard.

Then someone, I got a phone call about a week later. “Hey, I’d like to do a fund with you.” I don’t know nothing. Keep in mind, at this point, I’m a co-manager of a $100-million fund. I never even closed a piece of real estate. That was just all people saw my work ethic, my character. I didn’t know what I knew today yesterday, and I was just willing to always — that was when I went into the meeting with the attorney. I know nothing about being a fund manager. I didn’t know anything about underwriting commercial real estate a year ago. And here I am. I was just willing to believe in my ambition, believe in my potential, and rise to the occasion when the opportunity was presented to me. That’s the biggest thing. I knew I could. Therefore, I should. A lot of people need to know their own limitations. But I built it off of feelings. I built it off of fact. I crunched my numbers. I did as much research as I could before I took on that opportunity to know, yes, I could be successful.

That ended up not working out. But it did scale me forward to eventually where I said, all right. Cool. Every time I went back and I looked at everything that had gone wrong, where did it go wrong? What was my fault? How can I fix me? What was the team’s fault? I can’t fix other people other than finding people that are a better fit. So, that’s what I did. I found people that were a better fit. We put together our company. It took us about five months to build everything and lay out all of our plans. Then we just went on a hiatus of scaling up. We contracted over $100 million worth of multifamily in the first 13 months. Closed on 70 million of that. From 0 to 862 doors as me leading the team. So, I was very successful at that. It was a fun, crazy journey. A lot of lessons learned.

And here I am now, restarting all over with a new endeavor of a new industry going into self-storage. I’m excited. I’m excited to be building my team. I just started this endeavor late last year. And here we are the first two months. Let’s just call it the first eight weeks of 2023. I already got two deals under contract. I just put my third out, and it looks like I’m going to get awarded that. Already circling on four and five. So, we very well could by April have four deals under contract.

Pancham Gupta

Wow. That’s a lot of questions, a lot of hustling, the total Marine Corps mindset over there. Tough mindset. Before you got your own thing going and you had these 862 doors — if I got that right — under contract and closed, to anyone listening in and they’re probably quite curious at this time, how did you do that? How did you scale from 0 to 862? How did you raise capital for such a big, all these deals without having any investor base or track record?

Wesley Yates

One thing that I do very well is I build teams. One thing that I think we’re saying before we hit record was, one of the most underrated, underdeveloped aspects of every team is leadership. That is just what I am like. That’s my greatest asset. It’s my leadership. So, I went and I build solid — my weakest areas were my strongest partnerships. So, if I could raise capital, I wanted to have the best capital raisers that would come and solve my business plan, solve everything, was willing to be transparent. You must be honest and upfront. Because what’s the point of selling a lie? Because it’s an investment. At the end of the day, you’re going to find out. So, I’m always looking to better who I’m partnering with and always looking to better myself along the way. That’s really how I scaled up so quickly. It’s, I didn’t argue or fight over the most equity of every deal. I would rather have a little bit of a lot than a lot of a little. That’s really what it was.

The biggest thing about being a leader is its mission accomplishment first. I mean, the mission accomplishment, when you’re hosting an investment, is your investor’s returns. What determines that? The team that’s overseeing the assets themself. So, that’s really where you’ve got to look at. Okay. What is really that first domino that you got to focus on? Then making sure that by the time your main mission is like, alright, I want to give my investors the best return possible. Because if they are getting good returns by proxy, the managers are getting good returns. That’s always been the main focus of putting the mission at hand as the main focus of building everything else around how to support that cause.

Pancham Gupta

So, you basically assembled these teams. You bought these different partners where you were weakest. That’s what they call the strongest partnerships, where you bought these people who are very good in their field. You partnered with them, and they bought the capital. Someone bought the deal, and you were kind of the bag holding everything together. That’s pretty cool. For anyone who’s very curious, can you discuss your very first deal, the numbers? How did you — if you’re comfortable — structure that? Who did you bring on for the team? What was each other’s or everyone’s roles and responsibilities.

Wesley Yates

Actually, I can talk about some stuff that’s more recent. Since now I’m more into the self-storage industry, the first thing I did into that — I just started this endeavor about six months ago. The first thing I wanted to know is what exactly that question. What roles do I need? Who do I want on my team, and why? Where do we want to be purchasing? Why do we want to be purchasing there? How do I analyze the deals? How do I analyze the market? How do I build a team that’s best for that business plan? I don’t want a development team on a buy-and-hold project. I don’t want to buy an old team necessarily on a development project.

Looking at that, I found out what are the key ingredients to each segment of the industry. I then figured out, okay, cool, there’s my ingredients list. It’s like baking a cake. Step one: what ingredients do you need? Okay. Cool. There we go. Boom, boom, boom. So, I started looking at that. Everything on Facebook. I have not been to one self-storage event in person. I’m already under contract on 30 million, I think it is. So, how I did that is Facebook — Facebook, and LinkedIn, virtual, virtual, virtual, podcast, listened to the right people, and really just got connected with those that I saw that were making big changes — not necessarily all the room that were on the top of their game but that had the experience and were ready to step out and take on opportunities on their own.

I partnered with some of them. I got a very successful partner that’s one of the best developing groups out there in self-storage, which is S3. They are their own contract. They’ve been building self-storages for 33 years now. So, I had some great conversations with them. I showed them the value, showed them the business plan, took criticism, took advice, adapted my plans to that advice. Then I went to the next step. Talked to that person. They adapted my advice. Talked to the financing. If you don’t have a good contact with a broker or lenders, how do you know what business plan you’re really putting together? It’s too much assumption, instead of more accurate, factual data to build your plans around. So, that’s really how I put all that together. Then I told everyone, all right, cool. We know what we’re looking for. This is what he said he would build. This is what they said they would invest in. This is what we’re looking for, and this is where. That’s really what we did.

We found a great opportunity in a little town out in North Carolina. It’s a great opportunity. We did our feasibility study, looked at the demand. There was an additional 170,000 net rentable square feet that the market called for. We were like, okay, well, we know there’s the demand there. We put in our offer. Got everything rocking and rolling. Showed it to the developers. He gave it his green light. We’re moving forward with all of our environmental soils, architectural design, and everything else. I already called the city and had a meeting with the city. I asked them, “Hey, what would be your constraints if we wanted to build this?” I gave them a few just rough drawings, as an example, and talked to one of the local civil engineers. I asked him his feedback, see if he was willing to work with us. But I really just did my research on, like I said, the ingredients. Then all right, cool, what’s the baking temperature and time at? And I just put all of that together as we continue to move forward. Before we really even add all that, someone had heard about what we were doing, with Military and Patriots Investment Group. It was a contractor. They brought us a deal of that, wanted us to help them with that. We are taking on our own investors, but I’m also partnering once again with other funds and other family offices and other capital raisers that have their own pool of investors. But yeah, that’s just how we just dissect it. You don’t try to eat the elephant, not one bite. You break them up, right?

Pancham Gupta

Got it. I think anyone listening — thanks for sharing that. I got just a lot of good information there. But for anyone listening and wants to know, how do you take that very first step? You said you have Facebook and LinkedIn. You started going to these events, virtual events. How did you find that one person who was — I don’t know if you found the deal yourself, or someone found it for you. If that person is not you, then how did you find that person? Did you meet them through these groups and partnered with them? That’s how that happened? How did you go about finding that guy who’s interested in self-storage and is good with finding these opportunities? At the same time, same, for the capital raisers. You may have a capital raise that’s really good. The investors really love multifamily, but they may not like self-storage. So, how did you find that?

Wesley Yates

Yeah, I think it always got to start with what you want. You’re not going to find something you’re not looking for. So, if you don’t where know where you want to go, you’re already there. I kind of looked at that, and I looked at what I had built in multifamily. I started reflecting back on, okay, what do I want from my family? What do I need for me to move forward? Once I really figured out more research about what type of investing I wanted to do, I reverse engineered that. I was like, well, what do I want out of my investments? That was the question that I posed to myself. What do I want out of my investment that I’m not getting out of my stocks, that I’m not getting out of multifamily?

It was the cash flow. I wanted more cash flow. I looked out there, and I started just putting the question out there to a few people. “Hey, what are some other good industries out there?” Someone brought me, “Hey, you should check out this group.” One of the partners of the group, his name was Anthony — we’ve since partnered up on a few of these deals— he had a nice growing group. I think, since May, his group went from 0 to 3,800. He did it in less than a year. It scaled up, putting out a lot of good information. He was well-connected. He hadn’t closed on anything himself, but he was putting himself in the right situation where he was connecting. He was a connector. So, that’s what I needed.

I basically went to him. I talked with him and his partner, and really figured out okay, what do I need for self-storage? So, he was that one that helped me put together that ingredients list. Someone said, like, “Wes, you’re just the executioner.” So, what does that mean? Is that bad? I’m not killing anybody. He’s like, “No, no, no. You will have the first few steps of a plan, and you will start running. You will be the one that jumps off a cliff and build your parachute before you hit the ground.” I’m like, “Yeah, I just want to go.”

Funny thing is, you’ll laugh. I hope everyone can laugh at this because I can laugh at myself. Whenever I was in Iraq, I got separated from my wife. My wife basically told me on that call, “You’re just not worth waiting for.” So, I was like, alright, well, I’m coming back single. I was very much an introvert. I was scared to talk to people, if you can believe that. I was very timid. Talking to girls was like, “Oh, no.” One of my buddies gave me a dating book, like how to talk to women. There was one line in there that was like three seconds. Three seconds is all you need to talk yourself out of what you want. Three seconds is all it takes for you to talk yourself out of what you want. So, I don’t ever give myself a chance to scare myself of all the reasons why I am not worthy, I’m uneducated, I’m unsophisticated, I’m uncapable, I’m too poor to pursue my dream. I go, “No, I’m just going to take action. I will learn as I earn. I will keep always moving forward” — that law of inertia. Keeping yourself in motion is easier than stopping and starting again. That’s really just how I’ve continued to move forward and scale and just always find the right one.

I think successful people see potential in other people. I’ve never been put down by anyone that was more successful than me. The only people who have ever told me, “You’re an idiot, you’re dumb, you’re uncapable” have been people that were at my level or below. When I went to people and I showed them, “Hey, here’s my idea. Here’s the way Wes’ brain works to see this industry and put together a team, put together a process, and hit play on. Everyone just gets to win.” They were like, “I like it. I’m willing to be a part of it. Can I be that role?” That’s what I do. Okay. Yes, thank you. I was a Marine Corps recruiter at the tail end of my year. Please don’t hold that against me. So, I basically just recruited. That’s what I did. Leadership, recruiting. Boom. Put together the team with the right business plan, and then everybody gets to win — the investors, the team, every vendor involved. I like to create winning opportunities.

Pancham Gupta

Awesome. This is cool. One lesson to listeners who are listening is that never give up. Also, you found that one person in self-storage industry who’s connected to everyone. You went directly to that and took off from there, basically. So, let me ask you this. You were into multifamily. Why did you switch to self-storage just being within a year into multifamily?

Wesley Yates

Yeah, a lot of it had to do with the return on my time. A lot of it had to do with, I don’t like tenants. No offense if you’re living in an apartment. But there are a handful. With self-storage, you don’t have toilets, and you don’t have a live-in tenant. I still got someone renting out the space, but it was a lot easier to manage. Once we scaled up, my asset management team was like, “Well, you got to stop. We can’t manage all of this by ourself.” So, I looked at what’s easier to manage and then how to continue to scale that. That’s why I switched over.

Another reason is, I feel like multifamily syndication is oversaturated. When you look at your cap rates, which is a way to basically analyze the value of a commercial real estate — you take the NOI, and you divide it by the purchase price. Then that tells you, okay, cool, what is the property really. That’s your cap rate. So, if you know, you can reverse engineer that too. Okay. If I know the cap rate in the industry and I know the NOI, then I can tell you what the property should be worth. It’s just a math formula. But when your cap rates are lower than the interest rates in the market, and your cap rates are saying, “No, we’re not budging,” basically, the lower the cap rate, the more you’re paying for it. Your interest rates are doing this right now. It just doesn’t work when you sit there, and you’re talking to these brokers. They’re like, “Oh, it’s okay. You’re buying it on the value.” I’m like, “Yeah, but year one, I’m at a .9 DSCR. I can’t get debt for that. The NOI, the cashflow in the multifamily doesn’t even support the loan price to be able to pay my loan. That’s not a profit.

Mark my words. I really do feel it. I’ve talked to a lot of economists. I’ve talked to a lot of very successful people that have been doing this for decades. The last people that did — I call them popcorn investors. I’m kind of that right now — that just look at the hype of this today’s industry, they’re crashing. Because they came in 2019. They rode through 2020. They were just like woohoo. They underwrote all these deals at the low interest rates. Now they’re going into refinance. They’re having to either foreclose or sell, or they’re just barely even hitting their cash returns. It’s difficult. So, I think that we’re going to start seeing more and more and more foreclosures. So, if you’re investing in multifamily or had invested in multifamily from 2020 to 2022, I would ask, where are we at? I would probably say 2020 to 2021, through those two years. Because 2022, we already saw the interest rates coming back up. So, really, get to know your sponsorship team, and see how long that the team as a whole has been doing what they’ve been doing.

That was another big thing for me. I never want to be the most — not right now. Not until I’ve been doing this for at least a decade and exited most of my deals and have plenty and plenty of credibility. I don’t want to be the most sophisticated person on a deal. I always want to have a team around me that makes me look like the middle of the group. That’s why any investor that is going to invest with me moving forward, first thing I’m pretty much going to ask you is, what are you looking for? What returns are you looking for? Okay. Why? I’ll tell you flat out if a development is going to be your best bet, or you’re looking for a stabilized asset? Or, “Hey, you know what? Commercial real estate might not be your best bet right now. You might want to go look at this. You might want to go look at that.” At least, I’ll tell you straight up whether or not that what I’ve have to offer is the right opportunity for you.

I think finding a good sponsor that just wanted to be honest with you and not just tell — when you say, “Oh, I’m looking for this” — oh, yeah, we got that. “Okay. But I’m also looking for that.” Oh, yeah, we got that. It’s just like, okay, you seem to have everything I’m asking for here. If it seems too good to be true, then you need to — it might not always be. But it should be something that encourages you to ask more questions. The more transparent a co-sponsor or a sponsor is willing to be, that should be some green flag. We always talk about the red flags, but no one really ever highlights, what are my green flags? Someone that’s willing to take the time to answer your question, is it good, and not just tell you or sell you, but show you. Go and pull up the underwriting and the analyst, which is ultimately the business plan in your performa, and show this is why. Why do I want to build here? “Because the square foot per capita is here, and the average industry is up here. So, we’ve got plenty of room in our market. We’ve got this job growing. We got 87,100 doors, whatever.” I’ve made up a number there. It’s like, do they know? How much do they know around that? Or did they just look at a deal and take it to their investors because they’re deal hungry? Don’t be deal hungry for the sponsors out there. If you’re deal hungry, you’re desperate. And desperation is going to make you make mistakes.

Pancham Gupta

Yeah, for sure. Well, thank you for sharing a lot of that information, Wesley. Do you have anything that you’d like to add before we move on to the second part of the show?

Wesley Yates

I mean, I could go on forever. But yeah, if you want to know more or you want to get connected, whether it’s “Hey, I would like to get active even part time,” or, “Hey, I’m looking for good groups to invest in,” I would say that would be my only plug right there. Hit us up on our Facebook or LinkedIn page — Military & Patriots Investment Group. We love to see people reach their goals. That’s really what we want. We’re there. I’m building a team to help more and more and more people.

Pancham Gupta

Awesome. Well, thank you for that. We’ll be back after this short message.

(break)

Do you ever feel overwhelmed by the thought that you have no time after work and find no time to learn about investing? Do you feel left behind that you are not putting your money to work for you? Do you want to create passive income, but you do not know where to start? If so, I have good news for you. I have created an investor club which I call the Gold Collar Investor Club for Accredited Investors. I will be putting together investing opportunities exclusively for this group. These are the opportunities where I have done my part of the due diligence for you and will be investing my own money alongside you.

If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat, thegoldcollarinvestor.com/club. I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow.

In case you are wondering what is an accredited investor, an accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for the last two years. Another way to qualify as an accredited investor is if your total net worth is more than $1 million, excluding your personal home. It includes your stocks, 401ks, IRAs, cars, et cetera—just not the equity in your personal home. If this is you, I would highly encourage you to sign up.

(interview)

Pancham Gupta

So, Wesley, let’s move on to the second part of the show which I call Taking the Leap Round. I ask these four questions to every guest on my show. My first question for you is, when was the first time you invested out to the Wall Street?

Wesley Yates

Okay. I think it was really when I started doing all of this. I think the first actual investment was — I want to say, it was like into some courses and stuff like that. But my first actual investment was into a multifamily deal.

Pancham Gupta

Got it. Okay. 2019, right?

Wesley Yates

My first actual one was — because that was still planning and everything. My first one was in 2021. It was my first investment into that.

Pancham Gupta

Got it. Did you have any fears that you had to overcome when you bought that?

Wesley Yates

Oh, yeah. There’s a lot of, is this the right decision? Am I going to have buyers regret? Am I going to lose all my money? There’s a lot of those fears there. Really, how to overcome those was, I just did my research. Get to an answer. You’re never going to have a perfect plan. There is no such thing, unless you’re doing like an index fund. There is no perfect investment. There’s always risk when you’re investing. As long as any potential problems you can figure out the solution for, then be ready to move forward.

Don’t invest more than what you’re willing to lose. So, that was that. I didn’t start with more than what I was willing to lose. I really knew that I could rely on my own research, as well as other people that I trusted the research to go okay. Cool. I did that whole, like, what are you investing? I found someone else. I was like, what are you putting your money in? Okay. Cool. Can you send me that information? Okay. Cool. I did my own research. I was like, alright, well, how much did you put in there? I just put this much. Okay. Cool. Well, I can afford to put this much. So, that was really how that got started.

Pancham Gupta

Got it. Okay. My third question, can you share with us one investment that did not go as expected?

Wesley Yates

Yes, it was a multifamily deal. It was something we bought. We got into a partnership. It didn’t end well as it was planned. I’m not going to name any names. I don’t want to bad mouth anyone publicly. However, the project was an utter failure. Everything on the front end went well. We had all of our plans. We had everything approved. We did a successful capital raise. We put a lot of our own money into it as a team. We took over a project in Dallas. It was in the Dallas MSA. The partnership that we had owned their own construction company. They started work without receiving permits. So, when the city came out there just as a spot inspection, and saw — I mean, this was a full-standing development.

Pancham Gupta

Full-standing?

Wesley Yates

I say standing development. Basically, we took it over a 0% occupancy, and we were doing roughly about $44,000 a door of CapEx. Huge amount of renovation. We even made sure before we closed that the city didn’t have some order to condemn it and bulldoze it, which is funny. Because after the fact, they said,

“Oh, yeah, we need to bulldoze this.” I was like, “Whoa, what? No, we already asked you before. You’re going to bankrupt us.” It took us five months fighting with the city before we were even able to basically refile for permits, which we all know permits aren’t just a file when you have it.

We were behind schedule already by six months. Then the timeline of everything, it just did not work. There was vandalism. There was additional fire. We had to hire security. Then the lender wanted to stop giving us withdrawals from our own CapEx on that. It was very much a disaster. The construction company just didn’t hit one. Even from that, we did our new budget, our new timeline. Day to this day have not I eventually had to get myself out of that. Not necessarily file bankruptcy. But I was just like, look, I don’t have the money to put into this to help. So, I’m just going to do the honorable thing and give my equity, so that you all can bring someone else in as a JV partner to help with this. But yeah, it was a disaster. That’s where don’t always believe the hype.

I’m going to tell you that admitting, I’ll admit where all my failures are. I’ll admit all of that, and then how I’ve learned and adapted to overcome those in the future. But it’s really, I spend more time now interviewing people that I partner with than I have. I don’t just ask them. I need references. I want references that you don’t even know that I have now before I partner. I want to know how many successful projects you’ve done. How many times did you go over budget? How many times were you under budget? How many times did you hit your deadline? How many times did you miss your deadline or exceed your deadline? Your contractors are so crucial. Your financiers, your lenders, and banks are so crucial. Those are the two biggest points. Because either one of those could make or break a deal.

I learned that firsthand on that project. I think they ended up having to fire that — after I stepped down, they ended up firing that contractor because he just wasn’t getting the job done. It’s sad when you own the construction of your own or you’re a construction company on your own project, and you get fired and bring in another construction company. I’m not going to mention any names or any details or more than that. But just know for me and my piece, I accepted my ownership. I accepted my responsibility. I did what I could do to prevent making that same mistake again on any of my future deals. It really came down to fully doing my due diligence on my partners prior to contract, prior to being live on a deal.

Don’t believe the hype. I’m going to say that one more time. Just because someone’s on stage or just someone has a book, or someone’s teaching a mastermind, it does not mean anything. I know people right now that are charging $40,000 a course, and they’re doing $5 million capital calls and very well on their way of filing bankruptcy on a handful of their projects. So, don’t believe the hype. Do your own due diligence. And like I said, look for your green flags, not just your red flags.

Pancham Gupta

Cool, man. Thanks for sharing that. I hope it helps someone who’s listening. My last question for you is, what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

Wesley Yates

Okay. I was going to ask what’s Mainstreet? I heard of that one. Do your own research and figure out. If you don’t know the subject, a really good book that I would reference here is The Richest Man in Babylon. At the end of the day, you must understand you’re not just investing into a product or an industry. You’re investing in the people. Know people that are overseeing the project that you are investing in. Spend the time to at least know the basic lingo, and do your research. Save to invest, and really do the research. Make sure you understand what’s going on before you pull the trigger on your first investment. Don’t be scared. Just do your research.

Pancham Gupta

Cool. Well, thank you for sharing that, Wesley. How can people connect with you if they want to reach out and find out more about what you’re up to and what you’re doing today?

Wesley Yates

Yeah, the best thing to do is jump on that Facebook group. I do monthly lives. I bring on people from my network. We’re about to launch a co-sponsored program, where we’re going to people that have interest and don’t know where to start, and who are like me — “Hey, I can’t afford a $50,000 course, but I have ambition. I have the desire; I have a skill that I can bring to the table.” We’re going to start educating them and being willing to partner with them, paying it forward and partnering with them, bringing our ecosystem, our network, our investors and help them get their investment journey started. As well as any investors, I’m opening myself up now to take on my own investors, and bringing on a lot of partners that have been in accounting and finance management and asset management for several years to partner with, to help me oversee all of the taxing, and how the taxes work, and how the finance management works. Then that way, I can adequately manage any investor that I take on their investment into the right deals.

Pancham Gupta

Cool, man. Thank you so much, Wesley, for your time.

Wesley Yates

Yes, thank you for having me on. I really appreciate it.

Pancham Gupta

Thanks. Thanks for tuning in to The Gold Collar Investor Podcast. If you have any questions, email them to me at p@thegoldcollarinvestor.com. That’s p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

(outro)

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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